So, now you have had a look at the market factors that impact on recruitment, it’s important for you to think about the costs of making the wrong decisions. That is, employee turnover. And, let us tell you, losing people can be expensive –in more ways than you probably think, so why risk it?

The costs are not just about the cost of paying a recruitment agent (or the time you invest) when replacing the departed employee. Think about these factors for example, which all mean financial loss for your business:

  • Loss of productivity (begins when the employee starts searching for a new job):
    • Slowed momentum
    • Decreased morale
  • Recruitment costs:
    • Advertising
    • Short-listing
    • Interviewing
    • Testing (skills, medical, etc.)
  • Administrative costs
  • A manager’s time away from core business responsibilities
  • Negative impact on corporate image
  • Potential loss of sales opportunities and possible loss of customers
  • Temporary replacements (agency margins are HUGE!)
  • Loss of specialist knowledge
  • Disruption and burden on immediate team, internal and external customers
  • Impact on completion of projects

Therefore, in recruitment, we must manage our brand from the outset, because everything you say and do in front of a candidate impacts their decision to work for you or not. Our simple recommendations are that you:

As a business owner, do you think about your brand? Perhaps you don’t, but like it or not, everything we do in our business affects our brand. In the recruitment world, your brand as an employer is priceless (as long as it is positive). Think about it, if you have a great brand as an employer, people will come to you! This translates to real savings on recruitment costs and a higher calibre of person applying. Branding isn’t fluff – it’s smart business. Think about this for example – companies like Google, Facebook, or the Virgin brand don’t have to advertise to recruit. People come to them. Why? Because everyone knows they are great to work for. Pretty simple stuff. You can be your own Google or Virgin in your industry – it doesn’t cost much.

Manage your brand!

Time and time again, when we speak to our clients, cash flow is their biggest concern. We understand that – we are a micro business ourselves – but $250,000 a year for only 5 people leaving? No one can afford that.

So let’s cost that out for your business. Do you know how many people left your business within the past 12 months? Let’s say 5 people at an average of $50,000 per year. That is up to $250,000 in dead money – ouch! Now, imagine if you knew the reasons people were leaving (for example – lack of support from their manager) and you had put even some of that $250,000 in to those areas of your business. Not only might you have prevented some people leaving, but you also would have up skilled your people managers at the same time – for the same amount of dollars. Simple, right?


There are so many factors related to turnover that you won’t be able to control once your employee decides to leave, that it’s scary. According to the statisticians out in HR Land, the real cost of turnover is somewhere between 85% – 100% of leaving person’s annual salary!

  • Focus on selecting good quality candidates (great people over mediocre every time).
  • Focus on speed and effective communication (no one wants to wait 5 weeks to hear back after an interview).
  • Regard all candidate contact as a Marketing and PR exercise (Happy people tell 5 people about their experience, unhappy people tell 20).
  • Focus on candidate care (see above about happy people and unhappy people).
  • Familiarise (otherwise known as induction) new recruits as soon as they arrive and look after them! Sounds simple, but so many people get it wrong. Employees generally make up their mind as to whether they are going to stay, within the first 90 days of commencing – so a good initial induction is vital. Remember, you can only make a good impression once. And first impressions generally last.

Stay tuned for our next part series…From the HR Gurus Team!

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